AIG’s General Counsel Scores Millions In Severance Pay

[WSJ Law Blog]

The government’s ─ and public’s ─ fixation on curbing executive pay has largely bypassed the legal world.

But not completely, as witnessed by the flack taken by Anastasia Kelly, the departing general counsel at AIG, the insurer that has received billions in federal bailout dollars.

Earlier this month, as we noted here, Kelly said she was leaving the insurance company because of pay cuts imposed by Kenneth Feinberg, the federal pay tsar.

Feinberg capped 2009 annual cash salaries for most AIG executives at $500,000 ─ a significant reduction for Kelly, who previously had served as the top lawyer at Fannie Mae, Sears, and MCI/Worldcom.

Today, WSJ reports that AIG will pay Kelly several million dollars in severance pay.

Kelly, the Journal reports, drew scrutiny for advising other AIG executives, who were also considering leaving because of the pay cuts, what they could do to protect their rights to collect severance benefits.

AIG’s board hired Orrick Herrington to review Kelly’s actions in advising the executives over severance pay, but the firm concluded her conduct should not prevent her from receiving severance benefits.

On the subject of pay, it is worth checking out this blog post yesterday by Fred Krebs, the president of the Association of Corporate Counsel. The focus: what general counsel are predicting for 2010. In short, a lot of government regulation, including over how much executives should be paid.

The general counsel of such companies as Office Depot, Cigna, and Bell Canada are predicting that they’ll be busy advising their companies on how to deal with the thicket of new compensation regs. “I hope the regulators work with the business community to ensure that the new rules are clear and enforced fairly,” Elisa Garcia, the GC of Office Depot, said.